Capital Unit Gain-its Marketing And Comparison Of Its Features With That Of Other Companies

Capital Unit Gain (ULIP) of Bajaj Allianz Life Insurance Company Ltd. - Its marketing and comparison of features with similar policies of other companies. Submitted by:Smita Samaptika Pattanayak Roll No.-655 PGDM (INSURANCE) BIMTECH Under the supervision of

Project Guide Faculty Guide Mr. Ravi Narayan Satpathy Prof. K.K.Krishnan Executive Sales Manager Course Coordinator BAJAJ ALLIANZ Life Insurance Comp. Ltd PGDM (Insurance) Bhubaneswar BIMTECH

12th July, 2007

To whomsoever it may concern. Sub: Training Certificate. We here by certify that Smita Samaptika Pattanayak, a full time student of Post Graduate Diploma in Management (Insurance) course, 2006-08, of Birla Institute of Management Technology (BIMTECH), has worked with us in the capacity of Project Trainee for a period of two months starting from 1st May 2007. The title and scope of her project was “Capital Unit Gain (ULIP) of Bajaj Allianz Life Insurance Co. Ltd. - Its marketing and comparison of features with similar policies of other companies”. The project was carried out under the guidance of Mr. Ravi Narayan Satpathy, Executive Sales Manager, Bhubaneswar (Branch-II). We found her to be a dedicated and diligent performer. We take this opportunity to wish her every success in her future endeavors.

Sincerely

Tridiv Pattanaik Senior Area Manager Bhubaneswar (Branch –II)

ACKNOWLEDGEMENT

I would like to thank Mr. Ravi Narayan Satpathy, Executive Sales Manager, Bajaj Allianz Life Insurance Company Ltd., Bhubaneswar (Branch-2), who gave me idea and inspiration to take this task. Under his guidance I was able to smoothly complete my project. I express my sincere thanks to all the members of the office who spent their valuable time for guiding me through the currency of the project. I specially thank to Mr. Tridiv Pattanaik, Deputy Area Manager (BALIC-BBSR, Branch-2) for his valuable and kind suggestions to me I also wish to express my deep gratitude to Prof. K.K. Krishnan, BIRLA INSTITUTE OF MANAGEMENT TECHNOLOGY, Greater Noida for giving me opportunity and guidance for working on this topic. The valuable guidance and encouragement was an important factor for the successful completion of the project. Also I would like to thank all those who contributed towards the successful completion of the project.

With regards Smita Samaptika Pattanayak Roll No.-655 PGDM (Insurance) BIMTECH

TABLE OF CONTENTS S.No.

Particulars

Page No

1. Executive Summary

1

2. Review of literature

2

3. Research Methodology

4

4. Company Profile

5

5. Marketing and Selling life insurance products

6

5.1 The processes of selling

7

5.2. Unit linked insurance plan (ULIP)

10

5.3. Name and address of the people whom I sold the policies

12

6. Comparisons of features of ULIP (Capital Unit Gain) of Bajaj Allianz life insurance company with similar products of other companies. 6.1 Feature comparison on the basis of eligibility and benefits

13

6.2Feature comparison on the basis of Investment Funds & Flexibility

19

7. Findings

25

8. Conclusions & Recommendations

26

References

27

CHAPTER-1

EXECUTIVE SUMMARY

The topic of the report is “Capital Unit Gain (ULIP) of Bajaj Allianz Life Insurance Company Ltd – Its marketing and comparison of its features with that of other companies”. For marketing of the product, at first a list of prospects was prepared. Then appointments were fixed with them through telephonic conversation. Presentations and demonstrations were done to make them understand the benefits the product was having. Five of the prospects were convinced and the business was closed. A product comparison was also done. The product was Capital unit gain Capital unit gain is the most selling ULIP of this company. This product was compared with the similar products provided by its competitors. For this product brochures of different life insurance companies were referred. Help of the project guide and employees of other companies were taken for this task. It was found that this product is much more beneficial than similar products of other companies. Capital unit gain gives 95% allocation of funds in the share market which none of the ULIPs of other companies in this industry gives. It guarantees a maturity value of Rs 9, 20,634.865 at the end of 20th year if someone pays premium of Rs10, 000 for first three years only. It’s a wonderful policy if one wants to invest for capital appreciation. It also gives a life cover which is 10times that of the premium paid.

CHAPTER-2

REVIEW OF LITERATURE

For the purpose of completing the project effectively and in the most efficient manner, the research has undergone through a number of materials and has used the following literature review. “Concept of SELLING In Life Insurance” [1] This article says that life insurance is a simple concept. A person buys a policy that pays to his/her beneficiary or beneficiaries when he/she dies. Agents can make life insurance a way of life by knowing the concept. Thousands of agents all across the country are transforming their agencies by capitalising on a new opportunity - selling the concept of life insurance. “Salesmanship in Insurance” [2] This article examines the different steps in selling. The first step in selling is to identify prospects. It is followed by approaching the prospect, making presentation and demonstration, overcoming objections and then closing the business. The sales person should develop an account maintenance plan to make sure that the customer is not forgotten or lost. “Being an insurance agent-the pride and prejudice” [9] In this article the author says that she is very proud to be an insurance agent. It is one of the best professions. insurance advisors earn well for themselves and get a lot of recognition from the insurer that they work for, they are doing good to the customer to whom they are selling securities for their future and doing good to the insurance company that they are working for and doing good to their country. So they should feel proud for the noble job they are doing. The Economic Times, 16 July 2007,”Capital Unit Gain behind the success of Bajaj Allianz” This report says that the difference between this and other ULIPs is that in this policy, he first year premium is used to allocate capital units and the regular premium payable thereafter will be used to allocate accumulation units. It also says that while all new insurers were in red, Bajaj Allianz managed to post Rs.63crore profit last year and Rs.30 crore in first quarter of this financial year(2007-08).

“Unit Linked insurance Products”. This is a comprehensive note on ULIPs. It has made a very clear cut distinction between traditional and unit linked plans. Various types of charges collected by different insurers is explained here. It also made a list of features that investors need to ascertain from the selected insurers before taking an ULIP

CHAPTER-3

RESEARCH METHODOLOGY

The topic of the report is “Capital Unit Gain (ULIP) of Bajaj Allianz Life Insurance Comp. Ltd. – Its marketing and Comparison of its features with that of other companies”. For marketing of Capital Unit Gain policy, first a list of prospects was prepared. Then appointments with them were fixed through telephonic conversations. Thereafter they were approached. Demonstrations and presentations were made to make them understand the benefits the policy was having. Five people were successfully convinced. Business was closed for them. Three more people are about to complete the proceedings. For comparison of features of Capital unit gain with similar products of other life insurance companies, the researcher made a detailed study of these products. The similarities and dissimilarities among all these products were analysed. Different news paper articles and different items on internet were gone through to make a thorough comparison. Detailed discussions were held with the project guide to find a solution to this task. Different people working in other Life Insurance companies were also contacted to get help from them.

CHAPTER-4

COMPANY PROFILE

Bajaj Allianz Life Insurance: This was the number one private sector life insurance company for the financial year 2005-06. With a pan India presence and over 900 offices, Bajaj Allianz Life Insurance has already a customer base of close to 3.5 million customers. It has developed insurance solutions that cater to every segment and age-income profile. Currently it has a product portfolio of 31 products and more need based products are in the pipeline. As per IRDA results for 2006-07, Bajaj Allianz Life Insurance held the first position in terms of number of policies sold. Some key features: 1. Bajaj Allianz Life Insurance Company declared Rs.63 cr. profit for financial year 2006-07. 2. It is the first private sector life insurance company with a pan India network and strong retail focus to declare substantial profits for the financial year. 3. New business premium was Rs. 4270crore (US $ 1.04bn approx). For the first time a life insurance company has crossed US$1 bn new business in a financial year. 4. It issued over two million (20, 79,217) policies in this year- highest among all private players. It is the only life insurance company to cross two million policy mark in a financial year. 5. It collected more new business premium in this one year alone, than the total of last 5 year’s new business (Rs. 3281 cr.) 6. It sold more policies in this year than the total of last five years. 7. Largest distribution network to reach the customers across with 2, 13,000 agents, 900 offices in 840 towns, 200 corporate agents and bancassurance partners.

CHAPTER-5

MARKETING AND SELLING OF LIFE INSURANCE PRODUCTS

Marketing insurance policies is a tough job. Intangibility is among the main source of problem followed by the contingent nature of the marketer’s benefit and/or indemnity. Perception of risk is subjective and depends upon the attitude and the value system of an individual. Insurance is an outgo without much immediate gain and brings no perceivable value addition to the insured subject, be it a person, his property, pecuniary interests or conveyance. The job of marketing and selling life insurance has always been of a hybrid nature. At the contact level, a portion of the time spent is to counsel the prospect on the possible economic risks and consequences in his family or business economics, while another portion of that in follow-up contacts are devoted to persuading the prospect to do something about the solutions suggested. Reduced to its simplest terms, the fact-finding and advice-giving phase at the contact level may be considered as the work of counselor; the persuading phase as the work of a salesman. The more carefully the job of counseling is performed, the easier and simpler the job of persuading becomes. Thus the combination of science and art is salesmanship and practice of professional service concept. Those who practice salesmanship enjoy the friendship and confidence of their customers, and do more business year after year. The membership of the Million Dollar Round Table, an international association of insurance and financial service professionals, bears testimony to this reality. A potential buyer primarily expects that the saving should be a painless process and that the money saved should be absolutely safe. The challenge is to provide not only convenient payment options, but also mechanisms that could offer some measure of protection and relief to the customer if he is forced to disrupt the payment arrangement for unforeseen reasons.

5.1 THE PROCESS OF SELLING Personal selling is an ancient art, effective sales persons have more than instincts; they are trained in a method of analysis and customer management. Selling today is a profession that involves mastering and applying a whole set of principles. There are many different styles of personal selling, some consistent with the marketing concepts and some anti-ethical to spirit of marketing concept. 1. Identify prospects The first step in the selling process is to identify prospects. Although the company may provide leads, sales representatives need skills in developing their own leads. Leads can be developed in the following ways: • • • • • •

Asking current customers for the names of the prospects Cultivating other referrals sources, such as customers, friends, non competing sales representatives, bankers, clubs, associations etc. Engaging in speaking and writing activities that will draw attention. Examining data sources (newspapers, directories) in search of names. Using the telephone and mail to find leads. Dropping in unannounced on various offices (cold canvassing).

Sales representative need skills in screening out poor leads. Prospects can be qualified by examining their financial ability, nature of business, special requirements, location and likelihood of continuous business. In India, direct selling representatives rely mainly on extended family kinship pattern and go-between for prospects. 2. Pre Approach The salesperson needs to learn as much as possible about the prospect (what he needs, who is involved in the purchase decision). The salesperson should set call objectives, which might be to qualify the prospect or gather information or make an immediate sale. Another task is to decide on the best approach, which might be a personal visit, a phone call, or a letter. The best timing should be thought out because many prospects are busy at certain times. Before approaching the customer a salesperson must ensure the following: * Gathering information about the prospect - customer research * Categorization of prospects - Prospecting

3. Approach The salesperson should know how to greet the buyer to get the relationship off to a good start. This involves the salesperson's appearance, the opening lines and the follow-up remarks. The salesperson might consider wearing clothes similar to what buyer wear; show courtesy and attention to the buyer; and avoid distracting mannerisms. This might be followed by key questions and active listening to understand the buyer and his or her needs better. 4. Presentation and demonstration The sales person now tells the product 'story" to the buyer, following the AIDA formula of gaining attention, holding interest, arousing desire and obtaining action. The sales person emphasizes throughout the customer benefits, bringing in product features as evidence of these benefits. A benefit is any advantage, such as lower cost, less work or more profit for the buyer. A feature is a product characteristic, such as Double Sum assured benefit, Accidental Death Benefit, Waiver of Premium, Critical Illness. A common selling mistake is to dwell on product features (a product orientation instead of customer benefits (a market orientation). 5. Overcoming objections Customers almost always pose objections during the presentation or when asked for the order. Their resistance can be psychological or logical. Psychological resistance includes resistance to interference, preference for established supply sources or brands, apathy, reluctance to giving up something, unpleasant associations about other person, pre determined ideas, dislike of making decisions and neurotic attitude towards money. Logical resistance might consist of objections to the price, delivery schedule or certain product or company characteristics. To handle these objections, the salesperson maintains a positive approach, asks the buyer to clarify the objections or turns the objections into a reason for buying. The salesperson needs training in the broader skills of negotiation of which handling objections is a part.

6. Steps in eliminating doubts Closing- Now the salesperson attempts to close the sale. Some salespeople do not get to this stage or do not do it well. They lack confidence or feel uncomfortable about asking for the order or do not recognize the right psychological moment to close the sale. Salespersons need to know how to recognize closing signals from the buyer, including physical actions, statements or comments and questions. Salespersons can use one of several closing techniques. They can ask for the order, recapitulate the points of agreement, offer to help the secretary write up the order, ask whether the buyer wants A or B or indicate what the buyer will lose if the order is not placed now. The salesperson might offer the buyer specific inducements to close, such as a special price, an extra quantity at no charge or a token gift. 7. Follow-up and Maintenance This last step is necessary if the salesperson wants to ensure customer satisfaction and repeat business. Immediately after closing the salesperson should complete any necessary details on delivery time, purchase terms and other matters. The salesperson should schedule a follow up call when the initial order is received, to make sure there is proper installation, instruction and servicing. This visit would detect any problems, assure the buyer of the salespersons interest and reduce any cognitive dissonance that might have arisen. The salesperson should develop an account maintenance plan to make sure that the customer is not forgotten or lost.

5.2 Unit linked insurance plan (ULIP) Till recently, individuals seeking to provide protection to their family had no other option except a life insurance term plan. The plan promised a stipulated amount to the family of policyholder in the event of his death. However, the insurance sector has evolved over the last few years and a number of innovative products have hit the market. One product category that is increasingly catching the fancy of individuals is the Unit linked Insurance Plan (ULIP). These plans, a combination of insurance and investment, provide the policyholder with life cover and additionally offer the opportunity to earn a return on the premium paid. ULIPs give investors the best of both worlds -- risk cover and high returns. These combine life cover with the potential for a bigger nest egg. ULIPs are insurance policies in which the investment element, expenses and benefits are to the account of the policy holder. The unit linked product in the long run is a very effective and efficient product on offer for the customers, both in terms of return and cost. The basic investments are identifiable. The assets of the fund can be equity share, fixed income securities, money market instrument, property and derivative instruments. ULIPs are riding high these days on their equity investments, increasingly making their presence felt as savings and investment tools, a trend that is getting reflected in terms of both performance and average ticket size. Unit-linked products, the domain of which is seen to be expanding steadily, will continue to attract sections of the investing populace, insurance companies feel, while referring to figures that are evident in the latest performance charts. ULIPs - those focusing on equities - have on the whole managed to perform well during recent times, relative to the broad market, which has delivered decent returns in the past few years, the frequent ups and downs in indices notwithstanding, they point out. ULIPs, which are contemporary products across the world, are fast gaining in popularity in India. Some of the factors contributing to their success are the simplicity, transparency and flexibility of these plans. These policies are adaptable to the changing needs of the customers over their lifetime. They also give the choice to the customers to select an investment fund based on their risk profile and offer all the benefits of a traditional life insurance plan. The response to these plans is so encouraging that more and more players launching their versions. Today, ULIP accounts for the bulk of the first year premium income that most insurers earn going as high as 95 per cent for Birla Sun Life and ICICI Prudential.

According to data released by IRDA for April- December 2006, ULIP constituted almost 50% of the total portfolio in terms of premium income-a rise of 5%over the previous corresponding period. Premium earned from ULIP increased as much as 127% in the same period. Even in LIC during the previous fiscal, ULIPs contributed 72% of individual business portfolio, compared to just 50% during 2005-06. Share of traditional products in private insurers’ total portfolio has declined from 21% during April-December 205 to 13% in April-December 2006.in case of LIC in declined from 68% to 61% during the same period. ULIPS

CAGR Returns as on December 2006 1 year 2 year HDFC Standard Life-growth 43.8 47.4 TATA AIG life-equity 39.3 42.2 Bajaj Allianz-equity plus 39.1 41.8 Bajaj Allianz-equity gain 38.4 41.1 Kotak aggress growth 47.2 40.6 ICICI Prudential Maximiser(growth)2 37.5 37.6 Aviva life-growth(old) 32.4 36.7 ICICI Prudential Maximiser(growth) 36.3 36.5 Reliance life return-equity 36.6 34.8 (Source: Asia Insurance Post, February 2007)

5.3 Name and address of the people whom I sold the policies. 1. Soumya Kanta Rath Jagatsinghpur, Cuttack, Orissa 2. Stuti Pattanaik Rajendra Nagar, Cuttack Orissa 3. Kishore Kumar Sahu VSS Nagar, Bhubaneswar Orissa 4. Shyama Charan Pattanaik Rengali Dam site, Anugul, Orissa 5. Ajit Kumar Sahoo Keonjhar, Orissa

CHAPTER-6

COMPARISON OF FEATURES OF ULIP (CAPITAL UNIT GAIN) OF BAJAJ ALLIANZ LIFE INSURANCE COMPANY WITH SIMILAR PRODUCTS OF OTHER COMPANIES.

6.1 Feature Comparison of Unit Linked Plans: Eligibility & Benefits Features/Comp Bajaj Allianz anies Plan Name Capital Unit Gain

ICICI Prudential

Birla Sun Life

Life Time Super

Min/Max Age at entry

0 (risk commences at age 7)- 60

0 / 65

Max Age at maturity Min/max Term Min Max Premium Premium Type

70

75

10/Max till age 70 10,000/No limit

10 / Max life cover till 75 18,000/No Limit

Regular

Regular

New Classic Life Premier 30 days to 30 yrs for whole life plan, 40for 30 yrs term, 50 for 20 yrs term and so on. Max maturity age 70 years. 70 years. Min Annual premium of Rs.25000 Limited (up to 5 yrs) or Regular premium

Min/Max Sum Assured

Min S.A. =Higher of 5*Annualised Premium & 0.5*term*Annualised Premium; Max S.A. = y*annual premium; where y is: 0-30: 125; 31-35: 90; 3640: 60; 41-45: 40; 46-55: 20; 5660: 15;

Min S.A. = 0.5*term*Annualised Premium

Min S.A. 2 lacs. Max S.A. No limit

Death Benefit

SA less withdrawals or FV whichever is higher. Before age 7 it is the FV. DB to be set off by partial withdrawals made 2 yrs prior to death before age 60 and by all partial withdrawals made after age 58.

SA net of permissible withdrawals or FV whichever is higher. Before age 7 it is the FV.

Before age 5 only FV Between age 5 & 60 – higher of FV or SA less withdrawals in last 2 yrs prior to date of death. After age 60 – higher of FV or SA less all withdrawals made after age 58.

Maturity Benefit

Fund Value, settlement option

Fund Value, settlement option

Fund Value

Full Surrender

After 3 years 100% FV. Before 3 yrs 100% surrender penalty.

After 3 yrs. Charges after 3 & 4, yrs are at 2% & 1% respectively. No charges from yr 5 onwards.

Charges applicable in the first 6 years.

Feature Comparison of Unit Linked Plans: Eligibility & Benefits Features/Companies Plan Name Min/Max Age at entry

Bajaj Allianz Capital Unit Gain 0 (risk commences at age 7)- 60

Max Age at maturity

70

Min/max Term Min Max Premium Premium Type

10/Max till age 70 10,000/No limit Regular

15,20,30

Min/Max Sum Assured

Min S.A. =Higher of 5*Annualised Premium & 0.5*term*Annualised Premium; Max S.A. = y*annual premium; where y is: 0-30: 125; 31-35: 90; 36-40: 60; 41-45: 40; 46-55: 20; 56-60: 15;

S.A. is a multiple of Min Term term*0.5*AP A.P. Multiple Max up to 40* AP depends on entry age and term of the policy and policy holder gets a choice

Death Benefit

SA less withdrawals or FV whichever is higher. Before age 7 it is the FV. DB to be set off by partial withdrawals made 2 yrs prior to death before age 60 and by all partial withdrawals made after age 58. Fund Value, settlement option

SA less permissible SA –withdrawals in last 2 withdrawals or FV years plus FV whichever whichever is higher. is higher.

After 3 years 100% FV. Before 3 yrs 100% surrender penalty.

Anytime after 3 yrs. After 3 years 100% FV. Charges 100% first Before 3 yrs nothing is 3 yr reducing payable. thereafter. No charges after 6 yrs (20, 30) & 5 yrs

Maturity Benefit Full Surrender

Tata AIG Invest Assure II 30 days to 45/55/60 yrs (depending on term) 75

Regular

Fund Value

HDFC Standard Endowment Plus 18-65, 55 with riders 75 without riders, 65 otherwise 10-30 Rs 10,000 Regular; Over the term of the plan

Fund value

(15). Feature Comparison of Unit Linked Plans: Eligibility & Benefits Features/ Companies

Bajaj Allianz

Aviva

SBI Life

Plan Name Min/Max Age at entry Max Age at maturity Min/max Term

Capital Unit Gain 0 (risk commences at age 7)- 60 70

Easy Life Plus 18-50

Horizon ii 0-60

60

70

Max life cover till age 70

10, 15, 20, 25

Min/ Max Premium Premium Type

10,000/No limit

6000/50000

10/40 (for minor lives min term is 10 or 18entry age) 12,000/100,000

Regular

Regular

Regular; Over the term of the plan

Min/Max Sum Assured

Min SA =Higher of 5*Annualised Premium & 0.5*term*Annualised Premium; Max SA = y*annual premium; where y is: 0-30: 125; 31-35: 90; 3640: 60; 41-45: 40; 46-55: 20; 5660: 15;

10* AP for 10, 15 & 20 yr terms. 12.5* AP for 25 yr term

1.2 lakh/10 lakh

Death Benefit

SA less withdrawals or FV whichever is higher. Before age 7 it is the FV. DB to be set off by partial withdrawals made 2 yrs prior to death before age 60 and by all partial withdrawals made after age 58.

In yr 1, 110% of AP or FV whichever is higher; From yr 2 onwards, higher of Fund Value & SA. In case of accidental death, higher of SA & FV + additional SA

FV+SA, for age below 7, FV only

Maturity Benefit

Fund Value; settlement option

Fund Value; settlement option

FV

Full Surrender After 3 years 100% FV. Before 3 yrs 100% surrender penalty.

1-(1/1.05^N)] * value After 3 yrs, provided of initial units, at the at least 1 premium unit price on the date of has been paid.

maturity. Feature Comparison of Unit Linked Plans: Eligibility & Benefits Features/Com Bajaj Allianz Kotak Tata AIG panies Plan Name Capital Unit Gain Safe Investment Plan II Invest Assure Plus Min/Max Age 0 (risk commences at 0-65 30 days to at entry age 7)- 60 45/50/55/60 yrs (depending on term) Max Age at 70 75 75 maturity Min/max Term Max life cover till 10-30 15,20,25,30 age 70 Min Max 10,000/No limit 10,000/No Limit For Rs 50,000/ no Premium regular premium, 50,000 limit for limited pay Premium Type Regular Regular & Limited SP Payment; 3,5,6,7,10,15 & over term Min/Max Sum Assured

Min SA =Higher of 5*Annualised Premium & 0.5*term*Annualised Premium; Max SA = y*annual premium;

Greater of 5*AP or 0.5* Term*AP

1.25-25

Death Benefit

S.A. less withdrawals or F.V. whichever is higher. Before age 7 it is the F.V. DB to be set off by partial withdrawals made 2 yrs prior to death before age 60 and by all partial withdrawals made after age 58. Fund Value; with settlement option After 3 years 100% FV. Before 3 yrs 100% surrender penalty.

SA less withdrawals made in last 2 years prior to death, or FV which ever is higher + funds in Supp A/c(top-up account) DB to be set off by partial withdrawals made 2 yrs prior to death before age 60 and by all partial withdrawals made after age 58 Guaranteed Maturity Value

SA less permissible withdrawals or FV whichever is higher.

Maturity Benefit Full Surrender

Allowed only from top-up account, Anytime after 3rd yr. Thereafter charges are 3% in yr 4, 2% in yr 5, 1%

Fund Value; with settlement option Anytime after 3 yrs.

in yr 6 and 0% in yr 7 onwards. Feature Comparison of Unit Linked Plans: Eligibility & Benefit Features/ Companies Plan Name Min/Max Age at entry Max Age at maturity Min/max Term Min Max Premium Premium Type

Bajaj Allianz

Max New York life

Capital Unit Gain 0 (risk commences at age 7)- 60

Life Invest 91 days-70 yrs

70

75

Max life cover till age 70 10,000/No limit

Min 5/max 75; min term for RP is 10 Rs 50,000/ no limit

Regular

Regular; Limited, Single

Min/Max Sum Assured

Min SA =Higher of 5*Annualised Premium & 0.5*term*Annualised Premium; Max SA = y*annual premium; where y is: 0-30: 125; 31-35: 90; 36-40: 60; 41-45: 40; 46-55: 20; 56-60: 15;

Min: 62500 for SP; 250000 for other modes

Death Benefit

SA less withdrawals or FV whichever is higher. Before age 7 it is the FV. DB to be set off by partial withdrawals made 2 yrs prior to death before age 60 and by all partial withdrawals made after age 58. Fund Value; with settlement option

Level Cover: SA –withdrawals or FV whichever is higher; For Increasing Cover: SA + FV

Maturity Benefit

Fund Value

6.2. Feature Comparison of Unit Linked Plans: Investment Funds & Flexibility Features/ Companies Plan Name Investment Funds

Bajaj Allianz

Equity

Min Limit: 85% for Nifty Index & 80% Equity Growth and Accelerator MidCap

Debt

Min Limit: 80% for Income fund

Money market

Top-Ups

Switch Increase or decrease in regular premium Premium Holiday Guarantee

Capital Unit Gain 6 Funds 1) Nifty Index Fund 2) Balancer Fund 3) Income Fund 4) Liquid Fund 5) Equity Growth 6) Accelerator MidCap Fund

ICICI Prudential Life Time Super 4 Funds: 1) Maximiser 2) Balancer 3) Protector 4) Preserver

Birla Sun Life

Min Limit: 75% for Maximiser; Max 40% for Balancer;

Max Limit: 90% for Magnifier; 50% for Creator; 35% for Enhancer; 20% for Builder; 10% for Protector; Max Limit: 25% for Magnifier; 30% for Creator; 30% for Enhancer; 30% for Builder; 30% for Protector; 50% for Assure

New Classic Life Premier 6 Funds 1)Assure 2)Protector 3)Builder 4)Enhancer 5)Creator 6)Magnifier

Max Limit: 25% for Maximiser; Min 60% for Balancer; 100% for Protector; Max 50% for Preserver; Max Limit: 20% for Max Limit: 25% Max Limit: 20% for all; Income Fund, Equity for Maximiser; Growth Fund, Min 60% for Accelerator MidCap Balancer; 100% Fund; 15% for Nifty for Protector; Min Index Fund, 50% for 100% for Liquid Fund Preserver; Min Rs 5000; Max none Min Rs 10,000. Max No cumulative top-up to be limit with additional SA within 25% of max cumulative RP 3 free switches 4 free switch, min 2 free switches switch amt 2000 Not allowed.

Not Allowed

Not Allowed

Available.

Available

Available

None

Bonus Units

Loyalty additions as given

component above. Feature Comparison of Unit Linked Plans: Investment Funds & Flexibility Features/ Companies Plan Name Investment Funds

Bajaj Allianz

Tata AIG

SBI Life

Capital Unit Gain 6 Funds 1) Nifty Index Fund 2) Balancer Fund 3) Income Fund 4) Liquid Fund 5) Equity Growth Fund 6) Accelerator MidCap

Invest Assure II 5 Funds 1. Equity 2. Income 3. Liquid 4. Aggressive Growth 5. Stable Growth

Horizon II 2 Funds (composite) 1.Dynamic 2. Growth (Automatic Asset Allocation)

Equity

Min Limit: 85% for Nifty Index & 80% Equity Growth and Accelerator MidCap Min Limit: 80% for Income fund

0-100% for Equity; 5080% for Aggressive Growth; 30-50% for Stable Growth 0-100% for Income; 2050% for Aggressive Growth; 50-70% for Stable Growth; 0-20% for liquid 0-20% for Short Term Fixed Income

Max Limit: 100%

Rs 1,000

Debt

Money market

Top-Ups

Max Limit: 20% for Income Fund, Equity Growth Fund, Accelerator MidCap Fund; 15% for Nifty Index Fund, 100% for Liquid Fund Min Rs 5000; Max cumulative top-up to be within 25% of max cumulative RP

Max Limit: 100%

Max Limit: 100%

Switch

3 free switches

Up to 2 times a yr. Min 10000, max no limit. Cumulative top-up amount exceeding 25% of cumulative RP amt to increase SA by 1.25% or 5% 4 free switches p.a.

Increase or decrease in regular premium Premium Holiday

Not allowed.

Not allowed.

Automatic Asset Allocation Not Allowed

Available.

Available.

Available

Guarantee component

None

None

None

Feature Comparison of Unit Linked Plans: Investment Funds & Flexibility Features/ Companies Plan Name Investment Funds

Bajaj Allianz

Aviva

HDFC Standard

Capital Unit Gain 6 Funds 1) Nifty Index Fund 2) Balancer Fund 3) Income Fund 4) Liquid Fund 5) Equity Growth Fund 6) Acclerator MidCap Fund

EasyLife Plus 2 Funds: 1) With Profit Funds; 2) Unit Linked Fund a) Protector Fund; b) Growth fund; c) Balanced Fund; Option to put 100% in either fund.

Endowment Plus 6 Funds: 1. Liquid Fund; 2. Secure Managed Fund; 3. Defensive Managed Fund; 4. Balanced Managed Fund; 5.Equity Managed Fund 6.Growth Fund;

Equity

Min Limit: 85% for Nifty Index & 80% Equity Growth and Accelerator MidCap

Max Limit:: 30% for Defensive; 60% for Balanced; 100% for Growth and Equity Managed

Debt

Min Limit: 80% for Income fund

Money market

Max Limit: 20% for with profit funds & Protector; 45% for Balanced; 30-85% for Growth; 70-100% for With Profit & 60-100% for Protector; 50-90% for Balanced; 0-50% for Growth; 0-10% for With Profit & Balanced; 0-20% for Protector & Growth;

Max Limit: 20% for Income Fund, Equity Growth Fund, Accelerator MidCap Fund; 15% for Nifty Index Fund, 100% for Liquid Fund Min Rs 5000; Max none cumulative top-up to be within 25% of max cumulative RP 3 free switches 2 free switch Not allowed. Not allowed

Top-Ups

Switch Increase or decrease in regular premium Premium Holiday Guarantee

85% for Defensive; 70% for Balanced; 40% for Equity

100% for Liquid Funds

Rs 5,000 max within 25% of total RP paid till date of payment of top-up.

Available.

Available

Allowed Increase/decrease is allowed. Decrease is allowed after 3yrs of premium payment and FV at least Rs 15,000. Available

None

none

None

component Feature Comparison of Unit Linked Plans: Investment Funds & Flexibility Features\ Companies Plan Name Investment Funds

Bajaj Allianz Capital Unit Gain 6 Funds 1) Nifty Index Fund 2) Balancer Fund 3) Income Fund 4) Liquid Fund 5) Equity Growth Fund 6) Acclerator MidCap Fund

Kotak Safe Investment Plan II 6 Funds 1. Money Market 2. Gilt 3. Bond 4. Balanced 5. Growth 6. Floating Rate Fund

Equity

Min Limit: 85% for Nifty Index & 80% Equity Growth and Accelerator MidCap Min Limit: 80% for Income fund

Max Limit::60% for Balanced & 80% for Growth;

Debt Money market

Top-Ups

Switch Increase or decrease in regular premium Premium Holiday Guarantee component

100% for Gilt; Bond; Floating Rate, 70% in Balanced; 60% for Growth Max Limit: 20% for Income 100% for Money Market; Fund, Equity Growth Fund, 20% for Gilt, Bond, Accelerator MidCap Fund; Floating Rate; Balanced & 15% for Nifty Index Fund, Growth. 100% for Liquid Fund Min Rs 5000; Max Min Rs 10,000. cumulative top-up to be within 25% of max cumulative RP 3 free switches Allowed. No charges. (bid/offer spread) Not allowed. Increase/decrease not allowed Available. Available None SA guaranteed at maturity

Feature Comparison of Unit Linked Plans: Investment Funds & Flexibility Features/ Companies Plan Name Investment Funds

Bajaj Allianz

Max New York

Tata AIG

Capital Unit Gain 6 Funds 1) Nifty Index Fund 2) Balancer Fund 3) Income Fund 4) Liquid Fund 5) Equity Growth Fund 6) Accelerator MidCap Fund

Life Invest 4 Funds: 1. Secure Fund 2. Conservative Fund 3. Balanced Fund; 4. Growth Fund;

Invest Assure Plus 5 Funds 1. Equity 2. Income 3. Short Term Fixed Income 4. Aggressive Growth 5. Stable Growth

Equity

Min Limit: 85% for Nifty Index & 80% Equity Growth and Accelerator MidCap Min Limit: 80% for Income fund

20-70% for Growth; 10-40% for Balanced; 0-15% for Conservative;

0-100% for Equity; 5080% for Aggressive Growth; 30-50% for Stable Growth; 0-100% for Income; 2050% for Aggressive Growth; 50-70% for Stable Growth; 0-20% for liquid

Max Limit: 20% for Income Fund, Equity Growth Fund, Accelerator MidCap Fund; 15% for Nifty Index Fund, 100% for Liquid Fund Min Rs 5000; Max cumulative top-up to be within 25% of max cumulative RP

0-20% in each fund

0-20% for Short Term Fixed Income

Min Rs 10000; Max cumulative top-up to be within 25% of max cumulative RP

Switch

3 free switches

6 free switches

Up to 4 times a yr. Min 5000,max no limit. Cumulative top-up amount exceeding 25% of cumulative RP amt to increase SA by 1.25% or 5% 4 free switches p.a.

Increase or decrease in regular premium

Not allowed

Not allowed

Not allowed

Debt

Money market

Top-Ups

0-60% for Growth; 20-90% for Balanced; 50-100% for Conservative; 50-100% for Secure;

Premium Holiday

Available

Available if opted

Not applicable

Capital Unit Gain guarantees a maturity value of Rs 9, 20,634.865 at the end of 20th year if someone pays premium of Rs10, 000 for first 3 years only. Even if a person discontinues paying premium after first 3 annual payments, the fund value continues to grow at a rate of 20% per annum. If a person continues to pay premium for the whole period then the fund value at the end of 20th year comes out to be approximately Rs 22, 00,000 calculated at a rate of 20% growth per year. The actual fund value at the end of 20th year may be even higher than this if the stock market keeps on growing at the current rate. For the first 3 years, 95% of the premium is allocated to purchase units of mutual funds. There after 100% of premium is allocated. This is the only unit linked insurance policy in the market that has 95% premium allocation. That is why its returns are the highest.

CHAPTER-7

FINDINGS

The following products were compared among themselves. 1. 2. 3. 4. 5. 6. 7. 8. 9.

Bajaj Allianz (Capital Unit Gain) ICICI Prudential (Life time-II) SBI Life (Horizon-II) HDFC Standard(Endowment plus) max new life(Life Invest) TATA AIG(Invest Assure-II) AVIVA(Easy Life Plus) Kotak(Safe Investment Plan II) Birla Sun Life(New Classic Life Premier)

It was found that CUG of Bajaj Allianz has a mileage over similar products of other companies in many aspects. The most important feature is the fund allocation.95% of premium paid during the first three years is allocated to get funds and 100% is allocated afterwards. No other policy in the insurance market is available with such a high degree of allocation. The findings are given below: 1. Maximum age at maturity is as follows: For ICICI Prudential, ATA AIG, Kotak, Max New York-75 For Bajaj Allianz, Birla sun life, SBILife-70 For AVIVA-65 2. Minimum premium is charged by AVIVA (Rs. 6000 per annum) 3. Minimum top-up premium is provided by SBI Life (Rs 1000 per annum) 4. Maximum number of free switches is offered by Max New York (6 in number per annum) 5 Number of investment funds are as follows: SBI-2 Aviva-3 Max-4 TATA AIG-5 Bajaj Allianz, Birla sun life, SBI Life-6 6. Premium allocated to purchase units in stock market is as follows. Bajaj Allianz--------95% Max New York-----88% SBI Life--------------80% ICICI prudential----76% LIC ------------------73%

HDFC Standard-----74% Kotak ----------------73% TATA AIG----------50%

CHAPTER-8

CONCLUSION

Marketing and sells: Seventy-eight million households in rural India and 31 million in urban India are aware of life insurance but did not possess any policy. They need to understand the importance of taking a policy on their lives or their family members’ lives. Product comparison: From the above tables showing comparable features of products of Bajaj Allianz with that of other companies, it is very clear that the policy capital unit gain is the best ULIP for investment purposes. It has got the maximum premium allocation so it gives the maximum maturity value. It is simply incomparable. That is why this particular product has got tremendous appreciation among the customers. This is evident from the amount of business it gives to the total premium earned by this company.

REFERENCE

1. Shri Sekhar Chandra Sahoo, “Concept of Selling In Life Insurance”, The Journal of Insurance Institute of India, July –December 2004. 2. “Salesmanship In Insurance” by Prof. Sanjiv Marwah, Apeejay Business School, Dwarka, New Delhi. 3. Ritu Nanda, “Being an insurance agent-the pride and prejudice”, IRDA Journal January 2007. 4. The Economic Times, 16 July 2007, “Capital Unit Gain behind the success of Bajaj Allianz”. 5. S.S.Shrinivas and V. Anand, “Unit Linked insurance Products”, Insurance Chronicle, December 2005. 6. Simon Drimer, “Towards widening the existing customer base”, page no.125, Insurance Industry-Contemporary Issues, ICFAI University Press. 7. A.N.Poddar, “Marketing strategies for insurance products in the emerging scenario”, page no.106, Indian insurance industry-transition and prospects, New Century Publication. 8. K.Nitya Kalyani, “A wholesome profession-The agent’s work could use some sprucing up”, IRDA journal January 2005. 9. “Marketing insurance. How to become a super successful insurance salesman” by G.N.Bajpai. 10. Ravi Shankar, “Marketing of insurance services” chapter-19, page no.275, published in Services Marketing-the Indian perspective, Excel Books. 11. Ms. Suranjita Lahiri, “Brand Identity- Its Influence In Customer Decision Making”, The Journal of Insurance Institute of India, July –December 2004. 12. V.J.Varghese, “My Story”, Insurance Watch, April 2004. 13. Outlook Money, 14 Apr 2007, “The Terror Agent”. 14. The Business Line, 02 March 2006, “Selling life”.

15. Outlook Money, 15 May 2005, “ULIP Mania”. 16. The Economic Times, 1 July, 2006, “ULIP plans to flood market”. 17. Moneycontrol.com, 2006-12-11, “Bajaj Allianz Life launches Capital Unit Gain”. 18. The Economic Times, 16 July 2007, “Capital Unit Gain behind the success of Bajaj Allianz”. 19. The Economic Times, 30 January 2005, “Look before ULIP with insurance investment vehicles”. 20. Outlook Money, 2 January 2006 “Cover All Bases”. 21. The Business Line, 10 June 2007, “Know all About ULIPS”. 22. Product brochures of different life insurance companies. 23. Web site of all Life Insurance companies operating in India. 24. “Certified Insurance Consultant Program” of Bajaj Allianz Life Insurance Co. 25. www.irdaindia.gov 26. www.lifeinsurancecouncil.com